Supreme Court Refuses Eclipse 35 Appeal

The Supreme Court has refused Future Capital Partners’ (“FCP”) appeal to have the decision reached by the Court of Appeal considered by the highest tax tribunal in the land.

Last February the Court of Appeal dismissed FCP’s appeal against an earlier ruling in favour of HM Revenue & Customs (“HMRC”).

The Court of Appeal found Eclipse 35 (“E35”) was never likely to generate ‘contingent receipts’ and as a result held that E35 was “not commercially trading with a view to make any profit”.

The Court of Appeal therefore found that E35 was not a trading business within the meaning of the tax legislation.

The Supreme Court, after hearing an hour of legal argument from FCP’s representative, Jolyan Maughan QC, concluded that there were no new legal grounds to persuade them that the Court of Appeal had reached the wrong decision.

The Supreme Court ruling marks the end of a three year pursuit of E35 by HMRC and the Courts.

What next?

It is expected that HMRC will now turn its attention to the other Eclipse Film Partnerships formed and administered by FCP. Whether this is by Follower Notice or further litigation is yet to be determined.

It is understood that there are material differences between E35 and the other Eclipse Film Partnerships in relation to the expectation to receive contingent receipts referred to in E35. This may result in a different outcome however TFO Tax believes this is likely to be an uphill struggle.

The decision is expected to have an impact on a number of other investment arrangements offer tax advantages as well as other business ventures where HMRC may seek to deny losses or other deductions on the grounds that they would, or may never, make a profit.

Watch the hearing at

Leave a Comment